LOKESH.pdf class 11 imp
- 2. NAME – Lokesh Garg CLASS – 11th C ROLL NO - 34 ADMISSION NUMBER 3366 SUBJECT – ACCOUNTANCY TOPIC BANK RECONCILIATION STATEMENT SUBMITTED TO – MS. DIVYA KAUSHIK MAM
- 3. Introduction A BRS is a document that compares the company's Cash Book with the bank's Pass Book. It helps to identify and resolve differences in balances caused by timing issues or errors
- 4. Meaning and Importance of BRS BRS ensures the accuracy of records.It helps detect errors or unauthorized transactions. For example:"If a cheque is issued but not yet presented in the bank, it causes a discrepancy. BRS identifies such gaps."
- 5. Objectives of BRS The primary objectives of preparing a BRS are: •To reconcile the differences between the cash book and bank statement balances. •To ensure that all transactions are correctly recorded. •To identify errors, omissions, or unauthorized transactions. •To provide a clear picture of the actual bank balance.
- 6. Reasons for Discrepancies Discrepancies between the cash book and the bank statement arise due to: 1.Cheques issued but not yet cleared: These reduce the cash book balance but do not affect the bank statement balance until cleared. 2.Cheques deposited but not credited: These increase the cash book balance but do not affect the bank statement until processed by the bank. 3.Bank charges debited by the bank: Often not immediately recorded in the cash book. 4.Direct deposits into the bank account: Transactions such as interest or third-party payments recorded by the bank but not in the cash book. 5.Errors in recording transactions: Mistakes in either the cash book or bank statement.
- 7. Types of Adjustments 1.Unpresented Cheques: Cheques issued but not cleared by the bank. 2.Uncredited Deposits: Deposits made but not yet credited by the bank. 3.Bank Charges: Charges deducted by the bank, such as service charges or cheque book fees. 4.Direct Deposits: Payments directly credited to the bank account but not recorded in the cash book. 5.Dishonored Cheques: Cheques returned by the bank due to insufficient funds or other reasons. 6.Errors: Mistakes in either the cash book or the bank statement, such as transposition errors or omissions.
- 8. Solved Examples Illustration: The balance of cash at bank as shown in the Cash Book of Sahil & Co. on 31st December 2021 was ₹8,200. On comparing it with the pass book, the following differences were noted: 1.Cheque sent for collection amounting to ₹6,400 have not been cleared by the bank so far. 2.Cheque issued but not presented for payment ₹4,000. 3.Bank charges ₹200 not entered in the Cash Book. 4.Credit of ₹500 in the pass book in respect of interest was not recorded in the Cash Book. 5.A vendor deposited ₹2,000 directly in our bank account which was only recorded in the pass book. 6.As per standing instructions of Sahil & Co., the bank has made the following payments: •Insurance premium: ₹1,200 •Club Fees: ₹1,000 Prepare a Bank Reconciliation Statement as on 31st December 2021.
- 9. Common Errors in BRS •Omission of transactions: Forgetting to record bank charges or direct deposits. •Recording incorrect amounts: Errors in amounts or dates. •Misclassification: Placing adjustments in the wrong category. •Duplication of entries: Recording the same transaction twice.
- 10. Procedure to Prepare BRS The process involves: 1.Comparing records: Compare the entries in the bank column of the cash book with the bank statement. 2.Identifying discrepancies: Note down any differences. 3.Classifying adjustments: Identify items to be added or subtracted. 4.Reconciling balances: Adjust the cash book or bank statement balance to reconcile the two. 5.Finalizing the statement: Prepare the final BRS, listing all adjustments.
- 11. Need for Preparing BRS • Preparing a BRS is essential because: • It ensures the accuracy of financial records. • It helps detect errors and irregularities. • It reduces the risk of fraud. • It aids in understanding the actual cash position of the business. • It provides an accurate base for financial decision- making.
- 12. Advantages of Preparing BRS •Ensures accurate financial records. •Helps detect and prevent fraud. •Provides clarity on the cash position. •Aids in preparing accurate financial statements. •Builds trust with stakeholders.
- 13. Limitations of BRS •Time-consuming if records are not maintained properly. •Requires expertise to identify and classify discrepancies. •Does not prevent fraud but only detects it. •Limited to reconciling bank and cash book records.
- 14. Practical Applications 1.Corporate Accounting: Ensures accurate financial reporting. 2.Bank Audits: Helps auditors identify discrepancies in bank transactions. 3.Personal Finance: Aids individuals in managing their accounts effectively. 4.Small Businesses: Helps track daily financial transactions. . Practical Applications 1.Corporate Accounting: Ensures accurate financial reporting. 2.Bank Audits: Helps auditors identify discrepancies in bank transactions. 3.Personal Finance: Aids individuals in managing their accounts effectively. 4.Small Businesses: Helps track daily financial transactions. .
- 15. CONCLUSION . A Bank Reconciliation Statement is an indispensable tool for ensuring the accuracy and reliability of financial records. Regular preparation of BRS minimizes errors, prevents fraud, and provides a clear understanding of a business’s financial standing. Its significance in maintaining financial transparency cannot be overstated. A Bank Reconciliation Statement is an indispensable tool for ensuring the accuracy and reliability of financial records. Regular preparation of BRS minimizes errors, prevents fraud, and provides a clear understanding of a business’s financial standing. Its significance in maintaining financial transparency cannot be overstated. CONCLUSION